BT Group has announced its Q3 results, which reveal the Global Services (GS) business to have made notable improvements in profits over last year. It outperformed BT Retail, BT Wholesale and Openreach in terms of EBITDA growth, which increased 13% to £163m. At the operating profit level, GS moved from a loss in Q3 FY11 of £25m to a £7m profit. This reflects ongoing work to cuts costs, such as reducing third party network costs and improving terms on commercial arrangements with some suppliers (see our note from Q2 - BT Global Services to continue cost cutting).
For the first nine months of the financial year, the Global Services business remained in losses to the tune of £52m. However, this is an improvement on the operating loss of £93m in FY11. Underlying revenues during this nine-month period were down 6% to £5.2b and down 5% in Q3 to £1.74bn, with management citing poor economic conditions in Europe and a tough financial services sector.
BT Group underlying revenue declined 3% to £4.51b in Q3 and 4% for the first nine months – reflecting declines across all business units - with the exception of what is termed “Other and intra-group items” (+4%). Reported operating profit improved 2% in Q3 to £778m but by 4% over the nine months. Ian Livingston, Chief Executive said the results were “in line with our expectations for the year, which remain unchanged.”
All of the above has pleased investors who pushed shares up 4.5% after the results were announced.